Correlation Between Pan Entertainment and InfoBank

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Can any of the company-specific risk be diversified away by investing in both Pan Entertainment and InfoBank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pan Entertainment and InfoBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Entertainment Co and InfoBank, you can compare the effects of market volatilities on Pan Entertainment and InfoBank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pan Entertainment with a short position of InfoBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Entertainment and InfoBank.

Diversification Opportunities for Pan Entertainment and InfoBank

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Pan and InfoBank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Pan Entertainment Co and InfoBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfoBank and Pan Entertainment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pan Entertainment Co are associated (or correlated) with InfoBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfoBank has no effect on the direction of Pan Entertainment i.e., Pan Entertainment and InfoBank go up and down completely randomly.

Pair Corralation between Pan Entertainment and InfoBank

Assuming the 90 days trading horizon Pan Entertainment Co is expected to under-perform the InfoBank. But the stock apears to be less risky and, when comparing its historical volatility, Pan Entertainment Co is 1.75 times less risky than InfoBank. The stock trades about -0.09 of its potential returns per unit of risk. The InfoBank is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,190,910  in InfoBank on October 9, 2024 and sell it today you would lose (408,910) from holding InfoBank or give up 34.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Pan Entertainment Co  vs.  InfoBank

 Performance 
       Timeline  
Pan Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pan Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pan Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
InfoBank 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in InfoBank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, InfoBank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pan Entertainment and InfoBank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pan Entertainment and InfoBank

The main advantage of trading using opposite Pan Entertainment and InfoBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Entertainment position performs unexpectedly, InfoBank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in InfoBank will offset losses from the drop in InfoBank's long position.
The idea behind Pan Entertainment Co and InfoBank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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